Signing up and your money

References

You should impress upon the landlord that you will be a good tenant. The best way to do this is to get references from previous landlords. If you do not have these, for example, you have been living at home, you can provide them with a character reference (not from family) and an employer reference. Check with the landlord what is acceptable. The landlord/agent may also require written proof that you are or will be an enrolled student.

Guarantors

Guarantor agreements give the landlord a measure of financial security.

You may be asked to get your parents, or another family member, friend of the family or guardian to act as guarantor for your rent. This means they are prepared to pay your rent, if you don't pay it. Before signing any agreement it is important that both you and your guarantor understand that if you default on rent or the cost of damage, they will be responsible for making payment.

The guarantor agreement should state that it will only last for a set period of time and should set a limit on how much the guarantor can be asked to pay. It is also important to understand that if you enter into a contract with joint liability and your guarantor signs a general guarantor form, there is a significant financial risk to your guarantor. If another tenant moves out or fails to pay the rent, your guarantor could be taken to court under the terms of the guarantor form, even if you have paid your rent. Don't ask your guarantor to enter into any guarantor agreement which does not specify the limit of financial liability.

Landlords or agents require that the guarantor is based in the UK and a homeowner. If you are not able to offer a UK-based guarantor, you may be asked to pay three or six months' rent in advance.

Letting agency charges

Once you have found a property you are interested in, you may be asked to make a range of payments, both before and when you are signing the contract. Examples include:

Holding deposit (please see below).

Contract set-up fee (drawing up of the contract).

Reference checking fee.

Administration fee.

There is no limit to what agents can charge tenants once they have found them housing. Before you start to use a letting agent, you should ask them for a comprehensive list of all the fees that they charge. If they are making too many charges or you can't afford them, go elsewhere.

Remember: whenever you hand over money, you need to get a receipt. Make sure it states clearly the amount you pay, the date, your name, the name of the person you are paying the money to, and a description of what you are paying for (A holding deposit? Agency charges?). You should try to avoid paying cash (bankers draft, cheque or bank transfer are safer methods of paying).

Holding deposits

Landlords or lettings agents may request a holding deposit. This is a binding agreement on their part, subject to conditions (such as taking up references). The property should not be shown to other prospective tenants once a holding deposit has been taken.

Do not hand over a holding deposit unless you or your whole group has seen and agreed to take the property.

The holding deposit should be transferred to rent or used towards the tenancy deposit when the tenancy agreement has been signed. View an example of a holding deposit letter (PDF).

It is vital that you get in writing whether or not the holding deposit is refundable.

If you subsequently decide not to take the property, you will lose the holding deposit because the landlord/agency has lost rent by not renting to someone else whilst you were making your mind up.

What is a deposit?

A tenancy deposit is usually payable at the time you sign a tenancy agreement. It is the landlord's insurance against you causing damage to the property or breaching the contract in some other way. It usually covers:

damage to the property or the fittings, in excess of wear and tear;

the cost of cleaning to return the property to a lettable condition if necessary;

damage to décor;

the cost of removing large amounts of rubbish from the property;

the cost of replacing locks or keys if keys are not promptly returned; and

any outstanding rent.

The deposit cannot be used to cover reasonable wear and tear.

Tenancy Deposit Protection (TDP) schemes

Since April 2007, landlords entering into new tenancy agreements are now required to place any deposit with a government-authorised scheme, which will safeguard the money and offer independent adjudication in the event of any disagreement. Tenants who have kept their rented property in good condition can be confident that they will not have all or part of their deposit withheld unfairly. Prior to the introduction of this legislation, around one-fifth of tenants' deposits were not returned by landlords. (Reference: London Student Housing Guide website).

This means your landlord/agent must give you information about how your deposit is being protected at the time of entering the agreement. The landlord must pay your deposit into one of the three authorised schemes within 30 days of receiving your deposit.

There are three TDP schemes:

There is a custodial service, where the landlord sends the deposit to The Deposit Protection Service who hold the deposit for you. If the landlord wants to withhold any of the deposit then the tenant and the landlord need to agree to the deductions. The deposit is then returned, as agreed, to the tenant and landlord. The only way a deduction can be made without the tenants' agreement is where they are not contactable after the tenancy has ended.

There are two insurance-based schemes. Under these arrangements the deposit continues to be held by the landlord/agent but the money is insured, so that if the correct amount is not repaid by the landlord, the scheme can repay the money to the tenant and will recover it from the landlord. The largest scheme is run by The Dispute Service. The other scheme is Mydeposit.

Do all deposits have to be protected? Tenancy deposit protection will apply to all assured shorthold tenancies (ASTs) in England and Wales, where a deposit is taken. All contracts with a total annual rent of less than £100,000 are ASTs.

There is one example where the deposit protection legislation does not apply. If you live with your landlord, or your landlord lives in the same building but you're in a separate annex which is not self contained, deposit protection is not required.

What if your landlord/agent has not protected your deposit? The National Union of Students (NUS) have produced a Tenancy Deposit Protection: Enforcement Pack that gives you detailed advice on how to enforce and protect your rights. Download a copy of the Tenancy Deposit Protection: Enforcement Pack (PDF).

My landlord has said that instead of taking a tenancy deposit he will bill me at the end of the tenancy for any damages. Is this reasonable? In summary, a landlord does not have to take a deposit and can make charges at the end of the tenancy. Another slight twist on this would be a situation where a landlord makes an 'administration charge' at the beginning of the tenancy. There have been incidences of landlords charging an administration fee to cover advertising, drawing up contracts etc, on the understanding that none of it would be returned at the end of the agreement and the landlord would cover any damages.

What needs to be established by you is whether the 'administration charge' is paid to the landlord with an expectation that all or any of it will be refunded at the end of the tenancy. If it is, then it must be treated as a tenancy deposit and protected under a scheme. If, however, it is non-refundable then it is not a deposit. The contract should make clear which items constituting the admin charge will be refundable.

What about joint tenancies? The Tenancy Deposit Protection schemes vary in how they approach joint tenancies. Some schemes favour a nominated lead tenant who has the whole deposit protected in their name. If you are agreeing to this then make sure that you trust your house mate to give you the money back at the end of the tenancy. The lead tenant is also the only tenant who has access to the dispute procedure so make sure they consult you before agreeing to any deductions that will affect you and your deposit.

Other schemes register each person on the tenancy and the amount they have paid separately, in which case each tenant can use the dispute procedure.

What's the best way of paying a deposit?Always pay your deposit by cheque or credit card (because then you can prove payment in the event of any dispute) and get a receipt, which states the amount paid. If your deposit is protected by one of the TDP schemes this should include:

How much is a deposit going to cost me? This will depend on where you're living, but be prepared to pay four to six weeks' worth of rent. You must not treat it as your last month's rent when you are approaching the end of your tenancy – rent and deposits are totally separate.

What is a contract?

A contract is a legal document, which sets out the terms upon which a tenant can occupy a property. View an example contract (PDF). It is commonly referred to as a contract/tenancy agreement/assured shorthold tenancy (AST).

It should include the length of the tenancy, showing the start and finish dates; the names of all the tenants who will be living at the property; and the period of notice required.

The contract should include the full contact details of the landlord/agent. If you are renting via an agency make sure that you also have the landlords full contact details. You are legally entitled to this information. If you have just a name and telephone number it could be very difficult to pursue the landlord/agent should a dispute arise. You will also need to be absolutely clear about the terms and conditions. These will include details of what you are and are not allowed to do with regards to the property. These can be quite detailed and may include conditions such as paying the required bills and not causing noise disturbance or damaging the property.

It is essential that you read through and fully understand all the terms and conditions stated on the contract. If there is a dispute then the contract is the first point of reference and would be used as the main source of evidence in any court case.

The contract should also make clear what rent payments are due and when. In addition, it should be clear who is responsible for the bills eg water rates. Before you sign a contract, check that the advertised rent is what is stated on the contract. Errors do occur and if you sign the contract it may be difficult to argue later, especially if you do not have the original advert.

Before you sign a contract you may try to negotiate a break clause with your landlord or agent, as this will enable you to end your tenancy before the end of the fixed term. Often, landlords and agencies will request you to sign a 12- or 18-month contract. However, most academic terms at universities and colleges end in June and therefore you may be signing an agreement for longer than you require. Negotiating a break clause could allow you to end your agreement early.

Once a contract has been signed the terms and conditions cannot be altered unless both parties agree.

Never sign a contract on behalf of your housemates. Even if their name is on the contract, if they do not sign the agreement and decide not to move in, you could be held liable for the rent of the whole house.

Joint liability

If you have signed the same contract as your housemates and you all agree to take the property at the same time you will be jointly and severally liable with each of your housemates for any rent arrears and/or damage to the property. So, if one tenant moves out, the landlord/agent can pursue the remaining tenants (as well as the tenant who has left) for any monies due.

For example: There is a group of four tenants on a joint tenancy for nine months and one tenant decides to leave in the sixth month because they are fed up that no one else does any cleaning. Each joint tenant was paying an equal share of the rent. In this case, the landlord is entitled to collect the shortfall in rent from any or all of the remaining tenants. Equally, the utility companies can also pursue all tenants for any outstanding bills. The remaining tenants may subsequently be able to recover the money from the missing tenant.

Individual liability

This means that you are only liable for the rent for your room but have access to all the joint facilities of the property (ie bathroom, kitchen, etc).

You have a separate agreement between you and the landlord/agent. If another tenant leaves, the landlord/agent cannot ask that you cover their rent. You will only be liable for any damage to your room. The landlord/agent can make a charge for any damage to communal areas but they have to first try and find out who was responsible.

The disadvantages of this agreement are:

If someone leaves, you do not have any say over who the leaving tenant or the landlord finds to replace them.

Because you only have a tenancy of your room, the landlord can have relatively free access to the common parts of the property (ie bathroom, kitchen etc).

You may have to pay a separate licence fee for each TV in the house.

Does a contract need to be written?

We would strongly advise against moving into a property if the landlord/agent has not drawn up a contract.

If a dispute arises during your tenancy you will need to refer to your contract to establish your rights.

What if I'm not sure about certain clauses in the contract?

Do not sign a contract if you aren't happy with the terms or there are any aspects of the agreement you don't understand. You should always be given at least 24 hours to read the contract through. Never sign on the spot. Once the contract is signed it is legally binding on all parties – you do not get a chance to change your mind. If there are specific clauses which you are unsure about do not hesitate to contact or visit the accommodation team in the Student Life Centre for advice.

Can landlords write any terms and conditions they want into a contract?

No, they can't. The Unfair Terms in Consumer Contracts Regulations (1999) applies to all rented tenancies. As such any clauses deemed unfair could be unenforceable. This only refers to the standard terms of a contract (not clauses that have been separately negotiated). Examples of unfair terms could be:

penalty charges;

exclusion by the landlord/agent of accepting responsibility for loss or damage to personal property; and

ambiguous legal clauses.

What is a licence to occupy? There is another type of contract that students may encounter called a licence or licence to occupy. These are mainly found in resident landlord/family home properties. There are some differences between a licence and a joint/individual assured shorthold tenancy (AST). The following are some important things to consider before signing or agreeing to a licence:

A licence is simply permission from the owner to occupy the accommodation, whereas a tenancy is a form of ownership of the accommodation. In legal terms, this means your rights are reduced and, for example, you do not have the same protection from eviction that an AST provides.

The landlord will have the legal right to unrestricted access to the tenant's room. It may turn out that they never go in there, but the landlord will retain the right for such activities such as cleaning or decoration.

On the ending of a licence the landlord has an absolute right to re-possess the property.

If the property is transferred from one landlord to another (eg by sale, gift or death) the licence is not binding on the new owner.

For a resident landlord / family home property you cannot have an AST, only a licence to occupy (because you, as the tenant, do not have exclusive use of the property).

Because with a licence your rights are reduced (especially in terms of eviction), some unscrupulous landlords will try to get you to sign a licence when an AST is appropriate.

Do I need a contract when renting with a resident landlord/family home?

If you share accommodation with your landlord, either in their home as a lodger or in a converted property where you and the landlord live in different parts of the same building, you cannot have an AST. You will likely have a licence to occupy and in such a case your rights will be reduced. For example, landlords do not need a court order to evict you and you can be asked to leave at any time with little notice. However, your landlord should provide you with 'reasonable' notice to leave. There are no set rules about what is 'reasonable'. It depends on:

the length of time you have been living there;

the length of time between rent payments (payment weekly, one weeks' notice; payment monthly, one months notice);

whether you have been getting on with your landlord; and

how quickly the landlord needs someone else to move in.

There are also other factors to consider. It is important to establish the exact terms and conditions of the licence before agreeing to take the accommodation. Therefore it is advisable for you to ask for a written copy of the licence to keep for your records. You can then refer back to it if there is a problem later on.